What Is A Short Sale?

A  Short Sale is the sale of a home when sales preceeds do not fully pay off the existing loan(s) and lender(s) accept a discounted payoff to fully satisfy the loan.

If the homeowner does a Short Sale, how much will they have to pay to sell their home?

Nothing. It's true, in most cases you will pay literally no sale cost if your lender approves the Short Sale. All commissions, title and escrow fees are paid by the lender as part of the Short Sale approval. We will include the *following clause in the contract. Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.

Do lenders approve all Short Sales?

In a word, no. That is why it is critical to work with someone that extensive experience at getting Short Sales approved. From the presentation of the Short Sale package to the lender to working with the Loss Mitigations Department, we know how to keep the file moving towards approval.

I have two loans; can I still do a Short Sale?

Yes. We can work with both lenders (many times the same lender hold the 1st and the 2nd loans) to put together a Short Sale transaction. Even if the value of your home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate. In the end, neither lender wants to own another home through foreclosure.

What happens to the seller's credit rating when they allow an investor to short sell their property?

The way it shows on the credit report is that the loan is "paid" or "settled"; however there will be a notation that says "settled for less than originally owed" or something along these lines. Be careful how you state this. Each lender and reporting agency will say it a little different and the credit will still be affected even if a short sale is accepted, approved, and closed because of all the previous late payments.

Can an owner profit from a short sale?

The seller cannot profit (monetarily) from a pre-foreclosure short sale in most cases.

How do bankruptcies affect the possibility of doing a short sale?

Most mortgages won't consider a short sale if the homeowner is in bankruptcy...why? Because negotiating a short sale payoff is considered a collecton activity. Collection activities are prohibited in bankruptcy.

What documents do I have to include in a short sale package?

Documents depend on the lender. Each lender has different requirements. It is typical to require hardship letter, purchase and sales contract, settlement statement (HUD 1). 2 months of pay stubs, 2 months of bank statements, personal financial sheet, 2 year tax returns, and any other papers depending on the short sale.